Q3 Financial Results November 4, 2014 President and Chief Executive - PowerPoint PPT Presentation

W E D ELIVER Q3 Financial Results November 4, 2014 – President and Chief Executive Officer Stuart Bradie Brian Ferraioli – EVP and Chief Financial Officer Zachary Nagle – VP, Investor Relations

Forward-Looking Statements This presentation contains “forward - looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 2 1E of the Securities Exchange Act of 1934. These forward-looking statements include statements regarding our plans, objectives, goals, strategies, future events, future financial performance and backlog information and other information that is not historical information. When used in this presentation, the words “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts” or future or conditional verbs such as “will,” “should,” “could,” or “may,” and variations of such words or similar expressions are intended to identify forward-looking statements. All forward-looking statements are based upon our current expectations and various assumptions. Our expectations, beliefs, and projections are expressed in good faith, and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs, and projections will be achieved. There are numerous risks and uncertainties, many of which are beyond our control, that could cause actual results to differ materially from the forward-looking statements contained in this presentation. These risks and uncertainties include, but are not limited to: current or future economic conditions; our ability to obtain and perform under contracts from existing and new customers, including the U.S. Government; exposure to cost overruns, operating cost inflation and potential liability claims and contract disputes; access to trained engineers and other skilled workers; risks relating to operating through joint ventures and partnerships; risks inherent in doing business internationally; potential tax liabilities; maritime risks; changes in the demand for our services and increased competition; protection of intellectual property rights; risks associated with possible future acquisitions; risks related to our information technology systems; impairment of goodwill and/or intangible assets; reduction or reversal of previously recorded revenues; risks relating to audits and investigations, including by governments; compliance with laws and regulations, and changes thereto, including those relating to the environment, trade, exports and bribery; our creditworthiness and ability to comply with the financial covenants in our credit agreement; and other risk factors discussed in our most recently filed Form 10-K/A, any subsequent Form 10-Qs and 8-Ks, and other Securities and Exchange Commission filings. All forward-looking statements attributable to us, or persons acting on our behalf, apply only as of the date made and are expressly qualified in their entirety by the cautionary statements in this presentation. Except as required by law, we undertake no obligation to revise or update forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. This presentation contains the financial measure “EBITDA,” which is not calculated in accordance with generally accepted acco unting principles in the U.S. (“GAAP”). A reconciliation of the non-GAAP financial measure EBITDA to the most directly comparable GAAP financial measure has been provided in the Appendix to this presentation. 2 W E D ELIVER

KBR Safety: Creating a Zero Harm Culture at KBR Driving to Zero Harm 2014 – KBR TRIR* 0.45  Clear and consistent Health, Safety, Security and Environment (HSSE) 0.40 0.39 messaging from Senior Management in 0.36 0.35 town halls and videos 0.32 0.34  Structured HSSE Campaign Strategy 0.30 developed for 2015 0.25 0.24  HSSE Global Branding Strategy 0.20 developed, driving single point of focus 0.15 YTD  Improvement in Total Recordable Incident Rate (TRIR): 0.10  18% improvement year-to-date (YTD) since Q1 Actual By Quarter 0.05  38% improvement - Q3 versus Q1 0.00 Q1 Q2 Q3 * Total Recordable Incident Rate 3 W E D ELIVER

Q3 2014 Overview  Sequentially improved Fully Diluted EPS of $0.21  Operational performance of Gas Monetization remains strong; Hydrocarbons bookings and other execution strong, but had a welding issue on one contract (now resolved); Services performance stabilized and net position on Canadian pipe fabrication / module assembly projects largely unchanged. IGP continues to lag, driven by ongoing power projects and reduced volume of U.S. Gov’t work  Strong operating cash flow of $158M; significant cash inflow from Int’l Gov’t project; Cash balance remains strong - $1B at quarter-end  Continued focus on resolving commercial disputes (Corp. Tax Sharing Dispute - $24M gain; IGP LogCAP III and other disputes - net gain of $8M)  Strategic review on schedule. Analyst day at the NYSE on December 11, 2014 4 W E D ELIVER

Consolidated Results – Q3 2014 vs Q3 2013 Quarter Ending Commentary Sep 30, 2014 Sep 30, 2013 ($ in millions, except EPS)  Hydrocarbons bookings at ~$1B; ~$900M on reimbursable contracts Bookings $ 1,348 $ 2,175  Gas Monetization continues to perform well on two mega LNG projects Backlog of Unfilled Orders $ 12,144 $ 14,168  Hydrocarbons performance was good but results adversely impacted by a welding issue on one project (now resolved) that Revenue $ 1,657 $ 1,755 increased costs ($18M)  Services segment performance stabilized Gross Profit $ 30 $ 114 and all business units profitable in Q3 Equity in Earnings $ 38 $ 31  IGP adversely impacted by increased forecast costs on an EPC Power project. Corporate Overhead $ 58 $ 66 Focus continues on resolving commercial disputes - Q3 net gain of $8M. Legal fees Net Income Attributable to KBR $ 30 ($47) on other ongoing matters of $4M were a headwind during the quarter EPS (diluted) $ 0.21 ($0.32)  Settled tax sharing dispute with former parent - $24M gain EBITDA* $ 45 $ 32 *Consolidated EBITDA reconciliation provided in the Appendix 5 W E D ELIVER

Segment Reporting – Q3 2014 vs Q3 2013 Revenue Quarter Ending Consolidated reflects Gas Mon projects largely completed in  ($ in millions) Sep 30, 2014 Sep 30, 2013 2013 and lower volume on an LNG project that reached peak Revenue man-hours in 2013 Gas Monetization 343 537  Hydrocarbons reflects higher volumes on Downstream EPC Hydrocarbons 559 364 projects in the U.S. and services projects globally IGP 342 373 Services 405 465 Gross Profit and Equity in Earnings Other 8 16  Gas Monetization lower due to $71M in renegotiated fees and Consolidated Revenue 1,657 1,755 cost recoveries on an LNG project in 2013 that did not reoccur Gross Profit (Loss) and Equity in Earnings in 2014, reduced volume of earnings as that project moves Gas Monetization 64 155 towards completion and higher bid and proposal costs Hydrocarbons 18 40  Hydrocarbons performance impacted by $18M forecast cost IGP (33) 26 increase on an EPC project Services 6 (72)  IGP reflects $33M charge for higher forecast costs to complete Other (incl. Labor Cost Absorption "LCA") 13 (4) a power project and an $8M net gain related to continued Consolidated Profit & EE 68 145 actions to resolve commercial disputes. Legal fees of $4M on EBITDA ongoing disputes were a headwind in Q3 Gas Monetization 52 94  Services stabilized with all businesses profitable Hydrocarbons 16 42 Other Gross Profit reflects $13M YOY improvement in  IGP (27) 30 utilization of labor costs and reduced overheads Services 7 (70) Other (inc. LCA & Corp OH) (3) (64) Other EBITDA reflects Corp. gain on settlement of tax sharing  Consolidated EBITDA* 45 32 dispute w/ former parent of $24M, improved LCA and reduced overheads *Consolidated EBITDA reconciliation provided in the Appendix. 6 W E D ELIVER

Segment Reporting – Q3 2014 vs Q2 2014 Quarter Ending Revenue ($ in millions) Sep 30, 2014 Jun 30, 2014  Consolidated revenue reflects higher Oil & Gas and Revenue Downstream services projects’ volume and LogCAP III Gas Monetization 343 362 settlements, offset by lower aggregate volume in other Hydrocarbons 559 533 segments IGP 342 315 Services 405 439 Gross Profit and Equity in Earnings Other 8 10  Gas Monetization performing well on existing projects Consolidated Revenue 1,657 1,659  Hydrocarbons performance impacted by higher estimated Gross Profit (Loss) and Equity in Earnings costs to complete an EPC project Gas Monetization 64 66 Hydrocarbons 18 34 IGP impacted by higher costs to complete a power project  IGP (33) 4 in Q3 and a $15M benefit in 2Q14 for the resolution of an Services 6 (40) insurance claim that did not reoccur, partially offset by a Other (incl. Labor Cost Absorption "LCA") 13 13 net $8M gain related to the Company’s focus on resolving Consolidated Profit & EE 68 77 commercial disputes. Legal fees were also a headwind in Q3 EBITDA Gas Monetization 52 50 Services – all businesses profitable and improved  Hydrocarbons 16 35 utilization of MMM JV vessels in Mexico IGP (27) 5 Services 7 (37) Other (inc. LCA & Corp OH) (3) (31) Consolidated EBITDA* 45 22 *Consolidated EBITDA reconciliation provided in the Appendix. June 30, 2014 EBITDA has been re-stated to more accurately reflect consolidated FX 7 W E D ELIVER